The race to the bottom in the oil market has political implications not only for its leading actor, Saudi Arabia, who by flooding the market is seeking to inflict damage on political enemies and secure the survival of its own regime, but also for supporting cast members, such as Venezuela.
Venezuela is clearly not living its best moment. The IMF has predicted an economic contraction of 8% and a doubling of inflation to 720% in 2016. Essentials items such as food and medicine are increasingly scarce and the government has started dipping into its gold reserves to pay off debt.
So should Venezuela follow Saudi Arabia’s and Iran’s leads and ramp up production to compensate for the 24 USD/barrel that Venezuelan crude is fetching in the markets? PDVSA so far has made efforts to cut costs and announced modest plans to increase production by 100,000 barrels a day by the end of the year, for a total production of 2.84 million barrels (BloomberbBusiness). Will that do it?
Hardly. Enter the opposition. On December 6, 2015 the government lost its majority in the legislature. The opposition block Mesa de la Unidad Democrática campaigned on the promise of shortening Maduro’s presidency, due to end in 2019, through constitutional means. The intention to remove Maduro was formally announced at the opening session of the National Assembly last month. A constitutional end to Maduro’s government could take multiple paths: a revocatory referendum, which according to the Constitution of Venezuela can be used to remove any elected official after reaching the mid-point of the elected term; a constitutional amendment to reduce the length of the presidential term; a full constitutional reform via a constitutional convention; and, of course, voluntary resignation.
The latter seems unlikely, but the other options are being seriously discussed among opposition leaders, and, it’s fair to speculate, within the government ranks as well. The clock, however, is ticking. Reforms must happen in 2016, while the opposition has momentum, and before art. 233 of the Constitution kicks in in 2017 mandating that, in the event of the absence of the president, the vice president finish the term.
The obstacles that lay ahead of a constitutional removal of the president are many, but if the price of oil continues to fall and the crisis deepens, it may finally break the government’s determination. But will it break the opposition’s too?4